Saturday, October 10, 2009

Bill Gates whose full name is William Henry "Bill" Gates III born on October 28, 1955. He is an American business magnate, philanthropist, and chairman of Microsoft, the software company he founded with Paul Allen. He is ranked consistently one of the world's wealthiest people and the wealthiest overall as of 2009. During his career at Microsoft, Gates held the positions of CEO and chief software architect, and remains the largest individual shareholder with more than 8 percent of the common stock.He has also authored or co-authored several books.

After 33 years, Bill Gates backs to his almamater, the Harvard University, not as a student but as a successful businessman with a title "Doctor" Bill Gates. "I have been waiting for more than 30 years to say this, that I always told you that I come back and get my degree" said Dr. Gates in his introductory part of his speech. Watch the following video for the complete speech.

Wednesday, October 7, 2009

Any athlete will tell you that the time to train is in dismal weather, not on perfect, sun-drenched days. If you want to excel at the best of times, it seems, you need to be prepared for the worst.

Companies are little different. So as the economic outlook brightens, those that have worked hard to survive the tough times of the past year are best prepared to seize new opportunities. It is these enterprises that have risen to the top of the World's Best Companies/Global Top 40 list, compiled for BusinessWeek by management consulting firm A.T. Kearney.

What are some traits of the World's Best Companies? A commitment to innovation, diversified portfolios, aggressive expansion, strong leadership, and a clear vision for the future. "In an environment of continuous disruptive change, companies that have rigorous strategic planning initiatives that allow them to see over the horizon…are far more likely to win than those that make it up as they go along," says Paul Laudicina, chairman of A.T. Kearney.

To create the list, A.T. Kearney examined the 2,500 largest publicly listed companies in the world. Kearney's team singled out those with a minimum of $10 billion in sales in 2008, at least 25% of which came from outside the company's home region. It then ranked the companies on their sales growth and value creation—the rise of market capitalization after subtracting any increase in capital—over the past five years. This year, the list expanded to 40 companies from the 25 Kearney ranked in the past.

Thriving Industries

The top 40 come from 18 countries and industries ranging from chemicals and contracting to software and shipbuilding. But three groups stand out. There are six technology and telecommunications enterprises that have tapped into continuing demand for mobile-phone service and new digital hardware and services. The eight heavy-industry and engineering outfits performed well as infrastructure spending started to bounce back. Finally, companies in sectors tied to the commodities boom of recent years have in many cases continued to prosper, though their ranks have been thinned considerably.

Japanese electronics maker Nintendo (7974.T) claims the No. 1 spot this year. Its sales have risen 36% annually over the past five years, while its value growth averaged 38%. Despite the hard times of the past year, Nintendo's continued emphasis on innovation has helped the company develop must-haves such as the DS handheld game machine and the Wii console, which outsold rival offerings from Sony (SNE) and Microsoft (MSFT).

Nintendo's strategy is emblematic of the tech companies on the list. Like Nintendo, American technology giants Google (GOOG) (No. 2), Apple (AAPL) (No. 3), and Amazon.com (AMZN) (No. 17) have continued to invest heavily in innovation, commanding large market share with new products even as consumer spending and confidence have declined sharply. Telecom companies MTN (No. 7) and América Móvil (AMX) (No. 18) have profited handsomely by expanding into developing markets in Africa and Latin America.

Though they seem to lie at the other end of the business spectrum, engineering companies have enjoyed a similarly strong run. Initial dents following the recession-driven building bust have been patched up by government-financed infrastructure projects worldwide. Komatsu (6301.T) (No. 25) has consolidated its focus on construction and mining equipment. Doosan Heavy Industries (No. 4) has diversified by adding desalination plants to its business of building power stations for utilities. Similarly, Hyundai Heavy Industries (No. 5) has branched out beyond shipbuilding into construction machinery and solar power.

Fewer Commodities Companies

Commodities plays have fared less well. In 2008 three-fifths of the World's Best Companies were in energy and metals due to high commodities prices. This year, only a quarter are. Last year's leader, steel giant ArcelorMittal (MT), and four Russian energy, metals, and mining companies have vanished from the list. That said, 11 commodities companies remain. Australia's BHP Billiton (BHP), for example, the world's largest diversified miner, brought in more than $63 billion in revenue in 2008 and gained six spots, to No. 10, this year.

It's not all about industry. Charismatic chiefs—sometimes bordering on autocratic—can also be key to earning a place on the Global Top 40. Apple, for instance, has long prospered under the steady hand of Steve Jobs. With Jobs now back in the driver's seat after taking a leave of absence due to illness this year, expect Apple to continue to thrive. At Spanish textile and retail giant Inditex (No. 9), the owner of Zara stores, founder Amancio Ortega Gaona continues to implement his vision of fast fashion.

In Mexico, billionaire Carlos Slim has made América Móvil into the world's fourth largest cellular carrier, with more than 190 million subscribers. Klaus-Michael Kuehne has headed Kuehne + Nagel (KNIN.VX) (No. 23) for four decades and built it into a leader in global logistics services, helping preserve profits through targeted cost cuts as trade volumes plummeted over the past year. "Driven by an idea, [these leaders] have taken time building their companies…with the patience required to see their efforts come to fruition," says Norbert Jorek, partner at A.T. Kearney and principle author of the study.

From Exxon to World Fuel

Size, meanwhile, doesn't matter as much as some might think. Only four companies with market caps of greater than $100 billion made the top 40: BHP Billiton, French utility GDF Suez (GSZ.PA) (No. 6), Spanish phone carrier Telefónica (TEF) (No. 32), and oil giant ExxonMobil (XOM) (No. 38). Indeed, some of the most successful enterprises are relatively small. Miami-based World Fuel Services (INT), which markets marine, aviation, and land fuel products in 23 countries, is the smallest on the list with a market cap of $1.1 billion, but comes in at No. 13. German construction company Bilfinger Berger (GBFG.DE) (No. 33) had a market cap of $1.7 billion but has won impressive contracts such as the world's longest rail tunnel, a 30-mile-plus link under the Alps straddling the French-Italian border.

In the developing world, South Africa put in a strong showing with three companies in the Global Top 40. MTN, one of the pioneers in bringing mobile service to emerging markets, has proven that poor countries can be lucrative markets. Nigeria is its largest with some 28 million subscribers, and the company continues to expand in the Middle East. "Driven by a large entrepreneurial spirit, MTN had the will and appetite to take on that risk and the ability to turn risk into success," says Dobek Pater, partner at Africa Analysis, a consulting firm for tech companies in developing markets. And conglomerate Bidvest Group (No. 37) has placed an emphasis on food service but also has holdings in logistics and retailing. Both are examples of emerging-market companies poised to become global players: Bidvest has made acquisitions around the world, including in Australia and Central Europe, and MTN is currently in talks with India's Bharti Airtel (BRTI.BO) over a $24 billion merger.

This year's ranking of the World's Best Companies shows that even when stock markets are down, smart companies can be on the way up. A.T. Kearney Chairman Laudicina sees two important factors that are most likely to drive global economic performance in coming years: leveraging technology and innovation to enhance productivity, and demographic shifts such as graying populations. "Those companies who understand them best—and I think you see many of them on this list," will prosper, he says. "Those that don't are likely to be outside the bakery window looking in."

Tuesday, October 6, 2009

Asia appears to be recovering from the global recession faster than the West. But the financial imbalances that triggered the worst economic crisis in memory could still put the brakes on the world's fastest-growing economies. So warns economist and Morgan Stanley Asia chairman Stephen Roach in his new book, The Next Asia, a collection of his essays and analysis from the past several years that foreshadowed the meltdown. The following is an exclusive excerpt from the book's introduction.

As the most dynamic and rapidly growing region in the world over the past decade, developing Asia has attained a new level of prosperity. From China to India, the region's per capita income has more than doubled since the wrenching Asian financial crisis of 1997-98. Since 1990, over 400 million fewer Asians are living in poverty on incomes of less than $2 per day. On the surface, the region has much to celebrate on the long and arduous road to economic development. Many believe the Asia Century is now at hand.

Such celebration may be premature. As 2008 came to an end, every economy in the region had either slowed sharply or tumbled into outright recession. Far from having the autonomous capacity to decouple from weakness elsewhere in the world, export-led developing Asia had become even more tightly tethered to foreign markets than was the case a decade earlier. The export share of panregional gross domestic product (GDP) hit a record 47% in 2007, fully 10 percentage points higher than the portion in the late 1990s. With approximately 50% of those exports earmarked for the rich countries of the developed world, a rare and sharp synchronous downturn in the U.S., Europe and Japan undermined an increasingly important source of Asia's seemingly invincible growth dynamic. Far from celebrating a newfound resilience, the region was reeling from a severe external shock. Like it or not, Asia's newfound ascendancy remains precarious.

Ironically, this very outcome was predicted by China's Premier, Wen Jiabao. In a statement following the conclusion of the National People's Congress in March 2007, Premier Wen acknowledged that the Chinese economy looked extremely strong on the surface, especially in terms of GDP and employment growth. Yet, beneath the surface, he cautioned, such strength was far more questionable. In the case of China, he warned of an economy that was increasingly "unbalanced, unstable, uncoordinated and unsustainable." Little did he realize at the time how those "four uns," as they were later to become known, would pose an immediate and tough challenge to China's growth imperatives. Nor did he or other Asian leaders appreciate the broader implications of those insights for the region as a whole.

In warning of the precarious state of the Chinese economy, Wen was expressing concerns about the nation's very risky macro bet. With nearly 80% of its GDP going to exports and fixed investment, China had become overly reliant on cross-border trade and on the investments required to support the logistics and capacity of its increasingly powerful export machine. Not only has China slowed dramatically — with export growth turning sharply negative in late 2008 and industrial output growth slipping into the low single digits — but the rest of an increasingly China-centric Asian economy has been quick to follow.

China's export dependency went far beyond the unbalanced structure of its real economy. Its financial and currency policies were also aimed at deriving maximum support from external demand. A closed capital account and an undervalued renminbi (RMB) were icing on the cake for China's powerful strain of export-led growth. Moreover, to the extent that its currency-management objectives required ongoing recycling of a massive reservoir of foreign-exchange reserves into U.S. dollar – based assets, such capital inflows helped keep longer-term U.S. interest rates at exceptionally low levels. In effect, China's implicit interest-rate subsidy ended up becoming an important prop to bubble-prone U.S. asset markets and, ultimately, for the asset-dependent American consumer.

The linkage between Asian growth and the American consumer bears special mention. The U.S. consumer is still the dominant consumer in the global economy. Although America accounts for only about 4.5% of the world's population, its consumers spent about $10 trillion in 2008. By contrast, although China and India collectively account for nearly 40% of the world's population, their combined consumption was only about $2.5 trillion in 2008. During the boom, China and the rest of Asia reaped enormous benefits from a mercantilist growth model that was tied increasingly to the voracious appetite of the American consumer. Unfortunately, Asia did not do a good job in hedging that bet. The U.S. could now be in the early stages of a multiyear consumption retrenchment, making the problems of an unbalanced, export-dependent Asian economy even more acute.

But that's not the only challenge that Asia faces. Significantly, Wen's warning was not just about the imbalances of an economic and financial structure that had become overly reliant on exports. By raising concerns over instability, he was also cautioning of the perils of overreliance on energy, industrial materials and base metals. In an era of booming global growth, the threat of the so-called commodity supercycle and its ever higher price structure was a crushing burden on resource-intensive developing nations. The Premier urged China to focus more on what he called a "scientific development" strategy that would be based on improved efficiencies of resource consumption. Similarly, by warning of a lack of coordination, Wen was highlighting the fragmentation of the Chinese system — not just its banks and companies but also a system of governance that was still heavily dominated by power blocs at the provincial and local level. And his concerns over sustainability were specifically aimed at pollution and environmental degradation — unmistakably negative externalities of China's fixation on open-ended, manufacturing-led economic growth. To the extent that the Chinese experience is a microcosm of the broader Asian development model, Wen's "four uns" are very much a blueprint of what it will take to realize the aspirations of the Asian Century. Just as the financial crisis of the late 1990s was a wake-up call for the region to put its financial house in order, the global crisis and recession of 2008-09 is a strong signal for Asia to refocus the basic structure of its economic-development model.

From a macroeconomic point of view, better balance is Asia's most urgent priority. Central to that rebalancing will be the long-awaited emergence of the Asian consumer. For a region steeped in a culture of saving, this will not be an easy transformation. Here again, China undoubtedly holds the key. Its legendary excesses of precautionary savings are traceable to two major developments: massive layoffs associated with over 15 years of state-owned enterprise (SOE) reforms and the lack of an institutionalized social safety net. With SOE reforms likely to be ongoing — albeit probably at a slower pace in the years ahead — China needs more aggressive initiatives in the areas of social security, pensions, medical care and unemployment insurance.

Heightened efforts in the area of resource efficiency are also an urgent priority. A shift from manufacturing-led export growth to more of a services-based consumption model will relieve some of the inherent biases of energy- and resource-intensive growth. But Asia must do more in the way of investing in alternative energy technologies, retrofitting existing production platforms and moving to lighter construction and production techniques. Air and water pollution have become endemic to Asia's hypergrowth. That's especially true in China, home to seven of the 10 most polluted cities in the world and whose level of organic water pollutants is, by far, the worst in the world — more than three times the emissions rate of the No. 2 polluter, the U.S. Asia has attempted to explain away its poor track record, arguing that when scaled by its enormous population, its pollution problem still falls well short of developed countries'. Asian leaders have also argued that since economic development, itself, is a resource-burning and pollution-intensive endeavor, the delayed onset of the region's economic takeoff casts it unfairly as the villain in an era of global warming. Although both of these claims have considerable merit, a damaged planet engenders little sympathy for the Asian excuse. On an absolute basis, Asia now makes the largest contribution to total growth in global pollutants — a trend that must be arrested, regardless of the size of its population or the state of its economic development.

The Next Asia will also have to come to grips with its inherent lack of coordination by exerting greater control over its fragmented economies, markets and political systems. China's four largest banks, for example, still have over 50,000 branches between them — branches that in many cases function autonomously with respect to deposit-gathering and lending policies. Such a fragmented banking system has long been a major complication for China's central bank and its execution of a coherent monetary policy. Asia's rural-urban dichotomy also creates a natural fragmentation to its social and economic fabric — underscoring ever widening income and educational disparities that remain a major source of instability in the region. Widespread corruption further complicates the macro implementation of Asia's development imperatives. The more the region matures and makes further progress on the road to economic development, the greater the need for improved macro coordination.

Wen's "four uns" largely offer inward-looking prescriptions. But the Next Asia has much to gain from its external linkages — especially by focusing more on the benefits of cross-border economic integration. Perhaps the greatest opportunity in that regard could come from closer ties between the two greatest powers in the region: Japan and China. Despite a long and difficult history between them, these two nations are natural complements in many key respects. Japan, with its declining population and high-cost workforce, has much to gain from Chinese outsourcing and efficiency solutions. China, with its need for new technologies and pollution abatement, has just as much to gain from Japan's leadership position in both areas. And the rest of an increasingly integrated Asian economy would be well positioned to realize the benefits of supply-chain externalities that could be important by-products of greater integration between China and Japan.

Change and growth have been the mantra for Asia for the past quarter-century. But the endgame of sustained economic development and rising prosperity continues to be a moving target. Developing Asia has enjoyed spectacular success in the decade after the wrenching financial crisis of the late 1990s. But, as they say in the investment business, a track record of success is no guarantee of future performance. The current global recession is an important wake-up call for Asia — a not-so-subtle hint to find a new recipe for its growth model. The Next Asia that emerges from this transition will need to be all about a shift in focus from the quantity to the quality of the growth experience. Although the quality of economic growth is something of an amorphous construct, its attributes are undoubtedly steeped in better balance, stability, coordination, sustainability and integration. This is the essence of a critical transformation that could well usher in more of a pro-consumption, lighter and greener Asian economy than is the case today. The Next Asia will need to measure its success increasingly on those counts.

Change is never easy — especially on a scale that the Next Asia requires. But change has been at the core of all the Asian miracles of the post – World War II era. Once again, circumstances require this dynamic region to look inside itself and reinvent the model that will take it to the next phase of its remarkable journey. I remain confident that Asia will be able to pull it off. At the same time, I don't underestimate the risks that the Next Asia will face as it once again moves out of its comfort zone. That's something we all have in common in looking to the postcrisis era.
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The half-decade before the financial crisis was a go-go time for the global economy. Consumption reached unprecedented heights; so did oil prices and shipping rates. And that frantic buying and selling was a boon for manufacturing. As U.S. consumers flexed their credit cards for flat-panel TVs and video games, factories sprouted around the world to make all the stuff that was crammed into consumers' SUVs. But amid the recession, spending has shrunk dramatically, as debt-laden U.S. consumers are learning to save — and those factories have a lot less to do. During the downturn, the rates at which industrial capacity was being utilized in the U.S. and Japan, the world's two largest economies, plummeted to the lowest levels on record. In China, the world's workshop, tens of thousands of factories making mostly low-end merchandise have shut down.

A slowdown on the world's assembly lines is a normal part of any recession. As demand shrinks, so must production. But now that the recession is easing, there is considerable debate among economists about whether manufacturers will be rehiring workers and restarting assembly lines anytime soon. Despite aggressive downsizing by industries like auto manufacturing over the past 18 months, there are fears that the world remains stuck with so much excess production capacity that any recovery will be anemic, plagued by deflationary pressures, high unemployment and ailing bank-loan portfolios. "Unless we deal with the excess capacity situation, we will have a protracted crisis that will continue to wreak havoc on all countries," warned World Bank chief economist Justin Lin in a July speech.

There's evidence that this dire scenario is uncomfortably possible. Although China's economy is growing relatively strongly, the government is so concerned about excess capacity that it recently banned investments in aluminum production and imposed stiffer conditions on new projects in the steel, coal and petrochemical sectors. Without such controls, "it will be hard to prevent vicious market competition and increase economic benefits, and this could result in facility closures, layoffs and increases in banks' bad assets," a government statement said.

The rest of the industrialized world may be in worse shape. To measure excess capacity, economists use a metric called the "output gap," defined as the difference between the potential output of a given economy and what is actually being produced (including services). The Organization for Economic Cooperation and Development (OECD) is projecting that, despite global production cutbacks, the situation is actually getting worse because the recovery will be weak. In 2010 the output gap among 24 OECD member nations is projected to widen to -5.7% — the widest gulf by far in the post–World War II era.

Minding the gap isn't merely an academic exercise. Excess capacity directly affects the biggest question facing policymakers today: when to exit from stimulus programs that were introduced to combat the recession. Everyone agrees the cure for excess capacity is increasing demand, whether it is generated through a fundamentally strengthening economy or through artificial means like "Cash for Clunkers" measures. Turn off the tap too quickly before normal demand recovers, and the downturn could persist. "The best way of reducing excess capacity is by not prematurely unwinding stimulus spending," Lin of the World Bank told TIME.

But what if this recession isn't an ordinary recession? There is a widespread belief among economists that a secular shift in global spending patterns is under way. U.S. consumers, the usual drivers of economic growth, are reducing their outlays and may do so for years to come as they pay down debt. Under this "new normal" scenario, some of today's spare capacity may never come back into action because total demand will remain depressed indefinitely. Factories in some crowded sectors will have to be permanently closed or retooled to make different products.

Retooling is not impossible. Germany's Volkswagen is converting part of a car-engine plant to produce "green" electrical generators. And if you buy into the great Asian growth story, then there is a chance that spending by wealthier consumers in countries like China and India can offset at least some of the decreased demand in the West. HSBC economist Frederic Neumann said in a September report that some Asian manufacturers have gained back the power to raise prices, implying that the impact of excess capacity in the region might not be as severe as some fear. "What was so scary about the recession were the unprecedented output gaps that conjured up images of endless industrial slack and competition so fierce that no one could ever hope to raise their prices again," Neumann wrote. "What's happened now, however, is almost as stunning ... pricing power is starting to return far earlier than anyone dared to predict."

Others are not so sanguine. HSBC's China economist, Qu Hongbin, worries that his country is full of manufacturers trying to hang on while waiting for overseas demand to recover. "There still is hope that we'll go back to the old days," Qu says. But "demand in the future will be lower than in the past," he says. "That means the factory owners have to face reality" — the reality of them no longer cranking out ever more widgets in a widget-weary world.

Monday, October 5, 2009

Google is releasing "Google Wave" that is an online tool for real-time communication and collaboration which is in some aspect similar to Yahoo!'s Facebook that now is ranked as the second biggest website by Alexa after Google in terms of number of visitors.

Google Wave is designed to be both a conversation and a document where people can discuss and work together using richly formatted text, photos, videos, maps, and more.

What is a wave?

Google in their Wave page explains that:

A wave is equal parts conversation and document. People can communicate and work together with richly formatted text, photos, videos, maps, and more.

A wave is shared. Any participant can reply anywhere in the message, edit the content and add participants at any point in the process. Then playback lets anyone rewind the wave to see who said what and when.

A wave is live. With live transmission as you type, participants on a wave can have faster conversations, see edits and interact with extensions in real-time.

Acoording to Kharif of Businessweek, Google is combining instant messaging, e-mail, and real-time collaboration in Wave which is an early form of so-called real-time communication designed to make it easier for people to work together or interact socially over the Internet. Google started letting developers tinker with Wave at midyear and then introduced the tool on a trial basis to about 100,000 invited users starting on Sept. 30. Invitations were such a hot commodity that they were being sold on eBay (EBAY). For Google the hope is that Wave, once it's more widely available, will replace competing communications services such as e-mail, instant messaging, and possibly even social networks such as Facebook.
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